What stops Bitcoin to grow in price?

Lebedev

Lebedev

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Jun 26, 2018
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Recently there students of Cambridge university business school made a big and detailed report on regulating cryptocurrencies. Summary of their research consists in that the main aspect that stops crypto development is lack of coordination in work of governmental regulators. It affects a variety of work aspects, including even big differences in terminology and classification of digital assets.

This research, where a few world universities have taken part, they have deeply investigated regulation laws from 23 countries, these are US, Japan, European countries and Russia, because of its size ot was the first such an important research for the whole industry. Main target of it was to create instruments both analytical and practical for regulators, players of the market and other people who are interested in cryptocurrencies

We hope that the global market research on cryptocurrencies regulations we did will point out on problems of the world laws what is going to help regulators define their approach knowing about the world experience.
Written in foreword of the research

Head of cryptocurrencies and blockchain department of Cambridge center of alternative finances Michelle Rauhs thinks that this is a truly historical document for industry.

This first report of compare of crypto assets regulation as well as blockchain technology is an important analytical and practical instrument for regulators and players of the market.
Stated in the same foreword

Summaries of the research:
  • Lack of standard terminology for crypto assets between different regulators and different laws can lead to problems on international level
  • The most unclear laws could be found in countries that has lower level of financial regulations and low usage rate of cryptocurrencies. 42% of countries with high popularity of crypto, on the other hand, tried to make legal base with minimal amount of pitfalls, changing laws that already exists instead of creating new ones
  • Most of governments (82%) have completely different view on cryptocurrencies considered to be assets and other cryptocurrencies. Sequently legal status of these coins are simply assets
  • The first things regulators pay attention to is Initial Coin Offering (ICO) and crypto trading, these are types of investment that are the most similar to the classical ones. However, they pay almost no attention to other popular types of investment in crypto industry, such alternative ways of token distributions (airdrops and hard fork) as well as coins issue by mining. This lack of attention can affect legal status of the whole industry a lot
 
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Lebedev

Lebedev

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Jun 26, 2018
154
28
Points
1,161
Different Regulators. Different Regulations

Research also make emphasize on that each regulator is trying to classify and control crypto very different from how another does. Even when these regulators work according to the same laws.


Central banks are often can be found as first regulators, that defines the rules every player on the market as well as other regulators should follow; this includes emission control, distribution, sell and usage of digital assets. However, in most cases the only thing done by central bank is warnings of risks and problems connected to crypto industry.

The next regulators that goes right after central bank is ministry of finance, tax office and other institutes of government.

This graph shows results of analysis of more than 40 different countries’ laws, it shows that in 40% of cases central banks more often talk about crypto. Second and the third are Government and Financial Supervisory, these are ministers of finances and other institutions.

What stops Bitcoin to grow in price?


A little historical background. The first affirmation of cryptocurrencies belongs to (TRACFIN) and was done in year 2011. The second affirmation happen a year after and has taken place in European Central Bank.

But the most popular year of Bitcoin used to be year 2013, when market felt down for the first time. For 2014, 93% of countries that were in research did at least one statement of cryptocurrencies or blockchain. Back then, bitcoin was extremely popular in mass media and how it always happens, leap in price was the reason for all the world regulators to start talking about crypto, only to warn and prevent that time.

What is more, three of these countries that were first to do affiliation about crypto were first to create laws regulating the industry. These are UAE, Bermudian islands and Gibraltar.

What stops Bitcoin to grow in price?
Quantity of crypto affiliations in different years.

Terminology

One of the most important aspects of the research was the question of terminology. According to what they found out lack of standardized terminology for definition and description digital assets is likely to be a huge problem for regulators. This problem often occurs in international relations, but it also happens between different regulators in the same state.

Despite the fact that blockchain industry only is at the very beginning of its path, it develops extremely fast, that's one of the reasons why regulators need so much time - they aren't used to make important decisions as fast as it's required in the industry. That way government often use terminology that's been developed quite a while ago and can't be used correctly inside crypto industry.

This might lead to a big problem, because different institutions that work according to the same law and use the same terminology could make decisions that are in contradict with each other.

What stops Bitcoin to grow in price?
Evolution of terminology used by different regulation institutions.


The first affiliations about crypto industry used to be dedicated to Bitcoin and shown government being interested in distributed register technology and risks that are connected to it. This is why until year 2014 term “bitcoin” was used to describe all the cryptocurrencies. After year 2014 in official documents terms such “cryptocurrency” and “virtual currency” are becoming more spread, the most popular however, is “digital currency”.

“Virtual currency” term became popular in the year 2014 after it's been used in the first report of FATF dedicated to cryptocurrencies and their risks. This term is still used in several countries, such as USA, Canada, EU, Switzerland, Israel, Singapore and others.

Some regulators have recently started to use “cryptocurrency” as a synonymous to payment or exchange crypto tokens in order to differ them from other types of digital assets, i.e. security-tokens. As it's seen on the graph below Russia continue to use this term to describe the whole crypto ecosystem.


What stops Bitcoin to grow in price?
Terms that are used by world regulators in February 2019


Classification of digital assets

It is also stated in the research that in most countries, regulators has been tryings to classify digital assets in the right way. As usual first regulators tries to find out which of these assets could be viewed as classical assets in order to create similar laws for their regulations.

Because of that some crypto assets (security-tokens) are being classified as securities, most of jurisdiction simply divide all other tokens into utility and payments. Some countries on the other hand, have created a term of hybrid tokens - tokens that have specs of different types of digital assets.
 
Kostyax

Kostyax

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Jul 4, 2019
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I think all this does not matter. After all, no one ever knew exactly the dynamics of growth and the fall of Bitcoin and this is the only rule that always works) Yes, the only thing that all experts know is that Bitcoin will grow, and then fall, and growth will fall again after the fall)
 
Kostyax

Kostyax

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Jul 4, 2019
23
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Points
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Facebook undoubtedly gave an impetus to the growth of Bitcoin, when they announced their cryptocurrency. Although Facebook has always been just a commercial organization.
 

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